Wouldn't it be nice if cable subscriptions weren't sold as expensive bundles, and instead we could pick the channels we actually watch and pay for them a la carte? I might pick a few channels with live sports, high-budget dramas, and my favorite comedies. If I could pay a few dollars for each of these channels per month I'd have an affordable cable package that included the majority of programming I'd want to watch.
The unbundling discussions seem to have some major underlying assumptions: everyone will pick the channels they want, the bad channels nobody is willing to pay for will go away, the TV networks will continue business as usual, and accept lower revenues and profits in the process. There's a major problem with that line of thinking. If cable TV is unbundled due to consumer demand or new regulations the TV networks and cable companies won't stand by idly. Bundling will take on a new form, prices will rise, and only time will tell if consumers will be better off than they are today.

ESPN started to take off as a paid cable channel in the 1980's after they acquired exclusive rights to broadcast some college basketball games, notably the Big East conference tournament. There wasn't enough airtime on the big national networks to broadcast all of these games live, and many consumers across the northeast were willing to pay for it. After achieving some success broadcasting Big East games, one might think they'd purchase more college basketball rights to expand their geographical footprint while making their product more valuable to current customers. ESPN had another idea, which has proved extremely successful. ESPN knew if they only aired college basketball games they would only attract one segment of sports fans, but if they aired a variety of live sports they could conceivably get all sports fans. So they moved into completely different categories such as auto racing, thus expanding their potential subscriber base far beyond college basketball fans in the northeast and eventually making ESPN a must-have channel for most sports fans across the country.

The reason I bring this up is because I see the same thing happening in an unbundled world. If every consumer has the ability to subscribe to only the channels which he or she likes, each channel needs to appeal to the largest possible number of customers. Thus, ESPN would like to broadcast a little of everything rather than all of one or two things, and other channels would take the same approach. For example, an NFL fan might have to subscribe to ESPN, NBC, FOX, CBS, and NFL Network to watch every game, and that NFL fan would be subsidizing college sports, auto racing, poker, and everything else ESPN broadcasts. If we take this up a level, ESPN could split content across multiple channels to attract even more subscribers. For example, ESPN could put some high-profile college football games on ESPN2 or ESPNU in a bid to attract more subscribers to those channels. Heck, they could even create channels for specific teams or conferences with large dedicated audiences. Oh wait, they already did that with the Longhorn Network and SEC Network. The sports leagues also like this model, because they can maximize the revenue they get from broadcasting rights and it reduces the risk of relying on a single powerful partner.

ESPN could also go the complete opposite route and buy up everything, creating a mini monopoly on live sports broadcasting. Then they could conceivably charge whatever they wanted. This would be much more worrisome for consumers, but I think much less likely, both from a competitive and regulatory perspective.

We can take this line of thinking up another level to ESPN's parent company, Disney. As I've written about before in an article titled 'why a la carte cable won't happen', there are five large media companies that own the majority of TV channels in the US:

Disney: ABC, ESPN, Disney, A&E, History

Comcast: NBC, USA, Bravo, E!, The Weather Channel

News Corp: FOX, MyTV, FX, Fox Sports

CBS: CBS, CW, Showtime

Time Warner Inc: HBO, Cinemax, TNT, TBS, CNN

A sixth company, Viacom, owns several mid-tier cable channels: MTV, Comedy Central, Nickelodeon, Spike, BET, etc. There are also two notable independent networks: AMC and Discovery. Then there is PBS, which is a non-profit.

These large media companies could either sell all of their channels together as a mini-bundle, or split their best programming across various channels to encourage people to subscribe to multiple channels. For example, Disney could sell all of their family programming as part of one package, or split it up across several different channels like they do today. Time Warner might split up their best dramas across TNT and TBS, then only sell subscriptions to HBO and Cinemax to people who also subscribe to TNT or TBS. (Or they could offer discounts such that it only makes sense to also subscribe to TNT or TBS, much like cable companies do with triple-play bundles today.)

Then, there is the issue of a la carte pricing. It's easy to look at the affiliate fees a channel earns today and assume they'd sell it at a similar price a la carte. For example, ESPN reportedly gets about $5.75 per month from each of the 100 million subscribers that have a cable package with ESPN (just the main ESPN channel, not ESPN2/U/news/etc). In an unbundled world, far fewer than 100 million people would subscribe to ESPN, and they would have to raise rates to keep paying the astronomical sports rights fees. Ben Thompson has a very detailed breakdown on Stratechery of what this would look like and concluded ESPN would charge about $15 per month a la carte (again, just for the main ESPN channel).

So, even if cable TV packages are unbundled, we may be forced to buy several more channels than we think we'll need at higher prices than we'd expect. Depending on what you select, you may end up paying the same or more than you do today - and receive far fewer channels. The only people who really benefit in this scenario are the TV networks, because they'll be able to discontinue all the programming that nobody watches without losing any revenue. At least that's what I would do if I were running a TV network in an unbundled world. Let's be careful what we wish for.